Thoma Bravo Advantage
PROPOSED BUSINESS COMBINATION: ironsource
ENTERPRISE VALUE: $10.334 billion
ANTICIPATED SYMBOL: IS
Thoma Bravo Advantage proposes to combine with ironsource, which provides a comprehensive business platform for app developers.
ironSource provides the most comprehensive business platform for the app economy. The platform is designed to enable any app or game developer to turn their app into a scalable, successful business by helping them to monetize and analyze their app and grow and engage their users through multiple channels, including unique on-device distribution through partnerships with leading telecom operators and OEMs such as Orange and Samsung. In 2020, ironSource grew revenue 83% year-over-year to $332 million, with 94% from 291 customers with more than $100,000 of annual revenue, a dollar-based net expansion rate of 149%, and adjusted EBITDA margins of 31%. The company serves over 2.3 billion monthly active users across its global customer base.
ironSource powers the business growth of 87% of the top 100 games, and has been ranked multiple times as one of the top 3 platforms for driving both quality and scaled user growth by leading industry indexes. In addition, 14 of the 19 games published through the ironSource platform were ranked in the top 10 most downloaded games on either the Apple App Store or Google Play Store over the course of 2020, and one of them – Join Clash – was the most downloaded game in the world in February 2021.
The ironSource platform is made up of two solution suites, ironSource Sonic (“Sonic”) and ironSource Aura (“Aura”). The Sonic solution suite supports developers as they launch, monetize, and scale their apps and games. The Aura solution suite allows telecom operators to enrich the device experience by creating new engagement touchpoints that deliver relevant content for their users across the entire lifecycle of the device. This creates a unique on-device distribution channel for developers to promote their apps as an integral part of the device experience.
TRANSACTION
- Thoma Bravo Advantage has agreed to combine with ironSource based on a $11.1 billion pro forma equity valuation and the transaction is supported by a $1.3 billion oversubscribed Class A ordinary share PIPE led by a $300 million investment by an affiliate of Thoma Bravo, as well as investments from Tiger Global Management, LLC, Counterpoint Global (Morgan Stanley), Nuveen, LLC, Hedosophia, Wellington Management, The Baupost Group, and certain funds managed by Fidelity Investments Canada ULC and other institutional investors.
- Shares issued to the sponsor of Thoma Bravo Advantage will be subject to a 12-month lock-up with limited releases based on the trading price of the shares following the 150th day after the closing of the transaction; nearly all of ironSource’s shareholders will be subject to a 6-month lock-up after the closing of the transaction, subject to the same early release applicable to Thoma Bravo Advantage.
- Following the closing of the transaction, ironSource will have a dual class equity structure whereby current shareholders of ironSource will own Class B ordinary shares with five votes per share and holders of Class A ordinary shares, including Thoma Bravo Advantage’s shareholders, will have one vote per share.
- After giving effect to the transaction and assuming no redemptions by the Thoma Bravo Advantage shareholders, the company is expected to have approximately $740 million of unrestricted cash.
- Total consideration to ironSource shareholders will be $10 billion, which is expected to be comprised of $1.5 billion in cash consideration and a majority of the shares of the combined company.
- Upon completion of the transaction, the combined company will retain the ironSource Ltd. name.
PIPE
- $1.3 billion Class A ordinary share PIPE at $10.00 per share led by an affiliate of Thoma Bravo, L.P. (“Thoma Bravo”), as well as investments from Tiger Global Management, LLC, Counterpoint Global (Morgan Stanley), Nuveen, LLC, Hedosophia, Wellington Management, The Baupost Group, and certain funds managed by Fidelity Investments Canada ULC
EARNOUT
- Shares issued to the sponsor of Thoma Bravo Advantage will be subject to a 12-month lock-up with limited releases based on the trading price of the shares following the 150th day after the closing of the transaction;
- Nearly all of ironSource’s shareholders will be subject to a 6-month lock-up after the closing of the transaction, subject to the same early release applicable to Thoma Bravo Advantage.
SPONSOR SUPPORT AGREEMENT
In the event that redemptions by TBA’s shareholders in connection with the Transactions exceed $150 million, the Sponsor, at its election, must either
- (i) procure that affiliates of Thoma Bravo, L.P. commit to fund the amount of the Excess Redemptions in cash at closing by purchasing additional Company Ordinary Shares pursuant to an Investment Agreement,
- (ii) surrender for no consideration a number of Class B shares of TBA (founder shares) having a value equal to the Excess Redemptions or
- (iii) a combination of the foregoing; provided that in no event will Sponsor be required to fund cash in an amount in excess of, or forfeit Class B shares of TBA having a value in excess of, $250 million.
LOCKUP
- the Sponsor and certain directors of TBA agreed to transfer restrictions whereby, for a one year period following the closing of the Transactions, they may not sell or otherwise transfer any Company Ordinary Shares that are issued on account of the Class B ordinary shares of TBA held by them (founder shares).
- One-third of the Sponsor Lock-Up Securities shall be released from such lock-up restrictions in the event that the volume-weighted average price of a Class A Ordinary Share exceeds $15.00, $17.50 and $20.00 per share, respectively, for 20 trading days within any 30-trading day period commencing at least 150 days after the Closing Date.
NOTABLE CONDITIONS TO CLOSING
- The aggregate transaction proceeds available for release from the TBA’s trust account (after giving effect to any TBA Redemptions) plus the aggregate amount of the PIPE financing shall equal or exceed $1,300,000,000
NOTABLE CONIDITIONS TO TERMINATION
- By either TBA or the Company, if the consummation of the Mergers has not occurred on or prior to October 31, 2021 (the “Outside Date”)
ADVISORS
- Goldman Sachs & Co. LLC, Jefferies LLC and Citigroup Global Markets Inc. are serving as financial advisors to ironSource
- Latham & Watkins LLP and Meitar | Law Offices are serving as legal advisors to ironSource.
- Kirkland & Ellis LLP, Goldfarb Seligman & Co. and Cadwalader, Wickersham & Taft LLP are acting as legal advisors to Thoma Bravo Advantage.
- Goldman Sachs & Co. LLC, Citigroup Global Markets Inc. and Jefferies LLC acted as PIPE placement agents.
MANAGEMENT & BOARD
Executive Officers
Robert Sayle, 40
Chief Executive Officer
Mr. Sayle is also a partner at Thoma Bravo, and has been with the Firm since 2005, not long after the Firm’s first software investment. Since then, he has been instrumental in multiple acquisitions and the development of various software companies. In his tenure at Thoma Bravo, Mr. Sayle has played a material role in 17 platform investments, having sourced, negotiated, and led the majority of these investments. Mr. Sayle has also worked with portfolio company management teams to identify and execute 22 material add-on acquisitions, designed to provide scale and growth acceleration. In Mr. Sayle’s tenure at Thoma Bravo, he has been instrumental in developing the Firm’s operational best practices, and has built relationships with a long list of software executive teams. Prior to joining Thoma Bravo, Mr. Sayle worked with JPMorgan’s Investment Banking Division in the Technology, Media and Telecom Industry Group, where he was involved in mergers and acquisitions, divestitures, restructurings, and capital markets financings. He graduated from Harvard University with a BA degree in Economics with a concentration in Psychology.
Amy Coleman Redenbaugh, 52
Chief Financial Officer
Ms. Coleman Redenbaugh is also a managing director and the chief financial officer of Thoma Bravo, which she joined in 2008. Prior to joining Thoma Bravo, Ms. Coleman Redenbaugh was the chief financial officer of Quinten Road Management, an asset manager formed by GE Antares and Northwestern Mutual to provide junior capital in support of sponsor-led, middle-market leveraged buyouts. Earlier in her career, she was a tax manager in the Private Client Services Group at Arthur Andersen. Ms. Coleman Redenbaugh received a BS degree in Business Administration and Accounting from Indiana University of Pennsylvania.
Steven Schwab, 43
Corporate Strategy
Mr. Schwab is also a director, legal and the chief compliance officer at Thoma Bravo. Mr. Schwab joined Thoma Bravo in 2015 and is responsible for the Firm’s legal, compliance and regulatory functions, which includes the design, implementation and operation of the Firm’s compliance programs. Prior to joining Thoma Bravo, Mr. Schwab held senior legal, compliance and management positions, including general counsel and chief compliance officer, at international investment firms and broker-dealers. Earlier in his career, he practiced law in the Financial Services Groups at Winston & Strawn and Katten Muchin Rosenman in Chicago, where he advised clients across the spectrum of regulated financial services firms. Mr. Schwab is a regular speaker at industry conferences on topics affecting the private equity industry. He earned a JD degree, cum laude, from Loyola University Chicago School of Law and a BA degree from Miami University in Oxford, Ohio.
Board of Directors
Orlando Bravo, 50
Chairman of the Board of Directors
Mr. Bravo is also a Founder and Managing Partner of Thoma Bravo. He led Thoma Bravo’s early entry into software buyouts and built the Firm into one of the top private equity firms in the world. Mr. Bravo has overseen over 270 software acquisitions conducted by the Firm, representing more than $79 billion in transaction value. Forbes named him “Wall Street’s best dealmaker” in 2019, and he was part of Thomson Reuters “Eight Buyout Pros to Watch” in 2009. Mr. Bravo was born in Mayaguez, Puerto Rico. He graduated Phi Beta Kappa with a bachelor’s degree in economics and political science from Brown University in 1992 and earned a JD degree from Stanford Law School and an MBA degree from the Stanford Graduate School of Business in 1998.
Les Brun, 68
Director
Les Brun is Senior Advisor of G100 Companies, a private partnership of boutique businesses that deliver solutions, advice, and forums for CEOs of the world’s leading companies. Previously, he was a Managing Director in the New York office of CCMP Capital Advisors. Mr. Brun also founded and was Chairman Emeritus of Hamilton Lane, the world’s leading Private Equity advisory and management firm. He was also a member of the board of directors of the Richcourt Group, a Hamilton Lane company specializing in hedge fund of funds management. Mr. Brun is currently Chairman of the Board of Director of CDK Global, Inc. (NASDAQ “CDK”). He is Lead Director of Merck & Co., Inc. (NYSE “MRK”) and Broadridge Financial Solutions, Inc. (NYSE “BR”), where he was formerly Chairman of the Board of Directors. He also serves on the Board of Directors of Corning, Inc. (NYSE “GLW”), Ariel Investments, LLC, and Footprint, LLC. Mr. Brun was formerly Chairman of the Board of Directors of Automatic Data Processing, Inc. (NYSE “ADP”) until November 2015 and Chair of the Compensation Committee of Hewlett Packard Enterprise (NYSE “HPE”). He is also a Member of the Council on Foreign Relations. In addition, he was Chairman of the U.S. Small Business Administration’s S.B.I.C. Advisory Council, and a member of the Committee for the Reinvention of the S.B.A. Mr. Brun has over 40 years of investment banking, commercial banking and financial advisory experience. Mr. Brun holds a B.S. from the State University of New York at Buffalo, where he has been recognized as a Distinguished Alumnus, and is a former Trustee of the University at Buffalo Foundation, Inc. He is also a former Trustee of Widener University, as well as Episcopal Academy in Merion, PA. Mr. Brun was recognized by the NACD as one of America’s top 100 Corporate Directors in 2015 and most recently inducted into the 2019 Business Hall of Fame for Philadelphia Inquirer’s Industry Icons. We believe that Mr. Brun is qualified to serve on our board of directors due to his extensive financial advisory experience, serving as a board member of several companies, as well as his vast network of relationships.
Cam McMartin, 63
Director
Mr. McMartin served as the Chief Operating Officer of SailPoint Technologies Holdings, Inc. (NYSE “SAIL”) from May 2019 to December 2019 and as its Chief Financial Officer from 2011 to May 2019. Mr. McMartin formerly served as Managing Director and Chief Financial Officer for CenterPoint Ventures, a $425 million venture capital group. Before CenterPoint Ventures, Mr. McMartin held senior financial and operating positions with a number of corporations, including Senior VP, Operations at Dazel, Member, Office of the Chief Executive and Chief Financial Officer of DataCard, and Chief Financial Officer at Convex Computer (NYSE “CNX”). Mr. McMartin holds a B.A. in Business Administration from Trinity University and an M.B.A. from the University of Michigan. We believe that Mr. McMartin is qualified to serve on our board of directors due to his extensive industry experience, along with his financial and cybersecurity expertise.
Pierre Naudé, 62
Director
Pierre Naudé played a key role in the founding of nCino, Inc. (NASDAQ “NCNO”) and has served as its Chief Executive Officer and a member of the board of directors since its inception. With over 30 years of financial technology experience, Mr. Naudé is passionate about transforming the financial services industry through innovation, reputation and speed. Under his leadership, nCino has established itself as a premier global FinTech company with seven offices across four continents, more than 1,000 employees, and a strong company culture that has been recognized with numerous industry awards and accolades. Today, nCino works with over 1,200 financial institutions of all sizes across the world to help them increase efficiency and compliance, grow profitability and improve the client experience. Prior to nCino, Mr. Naudé served as the Divisional President of S1 Corporation, and Vice President and Managing Partner of Unisys. Mr. Naudé holds a B.S. in Finance and Management from Upper Iowa University. We believe that Mr. Naudé is qualified to serve on our board of directors due to his extensive industry experience and financial technology expertise.